USD/JPY refreshes almost five-month low near 148.40 as Fed dovish bets swell
- USD/JPY slumps to near 148.40 as traders have become increasingly confident that the Fed could cut interest rates in the June meeting.
- US President Trump confirmed 25% tariffs on Canada and Mexico and 10% on China.
- The BoJ is expected to raise interest rates further this year.
The USD/JPY pair posts a fresh almost five-month low near 148.40 in North American trading hours on Tuesday. The asset slumps as the US Dollar (USD) weakens amid escalating Federal Reserve (Fed) dovish bets. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 106.00, the lowest level seen in almost three months.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.58% | -0.21% | -0.67% | -0.43% | -0.10% | -0.29% | -0.81% | |
| EUR | 0.58% | 0.38% | -0.06% | 0.16% | 0.48% | 0.30% | -0.26% | |
| GBP | 0.21% | -0.38% | -0.43% | -0.22% | 0.11% | -0.07% | -0.62% | |
| JPY | 0.67% | 0.06% | 0.43% | 0.22% | 0.55% | 0.36% | -0.18% | |
| CAD | 0.43% | -0.16% | 0.22% | -0.22% | 0.33% | 0.15% | -0.41% | |
| AUD | 0.10% | -0.48% | -0.11% | -0.55% | -0.33% | -0.17% | -0.74% | |
| NZD | 0.29% | -0.30% | 0.07% | -0.36% | -0.15% | 0.17% | -0.55% | |
| CHF | 0.81% | 0.26% | 0.62% | 0.18% | 0.41% | 0.74% | 0.55% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Traders have raised bets supporting the Fed to resume the policy-easing cycle from the June meeting due to an array of weak US economic data. According to the CME FedWatch tool, the probability for the central bank to cut interest rates in June has increased to 86% from 71% recorded a week ago.
Meanwhile, an additional 10% tariffs from US President Donald Trump on China and 25% on Canada and Mexico have failed to improve the safe-haven appeal of the US Dollar. Trump imposed an additional 10% levy on China for pouring drugs into the US economy. In retaliation, China has also announced tariffs on significant agriculture imports. This has resulted in a trade war between the world’s biggest nations, which has weighed on US indices.
On Monday, the S&P 500 slumped over 2% after Trump confirmed tariffs on his North American peers and China. Over weakness in the Wall Street, US Treasury Secretary Scott Bessent said that the focus of the government is majorly on strengthening small businesses. “Wall Street’s done great, Wall Street can continue to do fine, but we have a focus on small business and consumers,” Bessent said on Fox News’s Fox & Friends on Tuesday, Bloomberg reported.
In the Asia-Pacific region, the Japanese Yen (JPY) performs strongly on mounting expectations that the Bank of Japan (BoJ) will raise interest rates again this year.
Net long positions in yen futures among non-commercial traders - such as hedge funds and other speculators - soared to 96K contracts in the week ending February 25. That was up from 61K a week earlier, data from the U.S. Commodity Futures Trading Commission showed on Friday and was a record on data stretching back more than 30 years, Reuters report.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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